STUDENT FINANCIAL LITERACY has been a growing concern, not only because of the connection to persistence and retention, but also in terms of success beyond college years that includes repayment of student loans and general fiscal responsibility in adulthood. We've likely all heard the stories of the $82 pizza, its price inflated by a check that bounced and resulting fees from the bank and pizza parlor. It shows the need for students to understand the consequences of spending money they don't have.
Best practices in financial literacy education can be found on many college campuses. There are likely some very good ideas percolating on your own campus. Yet, despite the increased focus on financial literacy, some institutions are backing away from recommending student loan lenders because of the regulatory burden imposed on institutions that maintain preferred lender lists. Here's a look at decision making related to educating students on personal finances, specifically lending.
LITERACY EDUCATION IN PRACTICE
At Alvernia University (Pa.), Jason Deitz, associate director of student financial planning, developed a one-credit online class likely to be rolled out in the fall semester. Also, the required First Year seminar class now includes financial literacy information, with content from the Pennsylvania Higher Education Assistance Association. Plans are in the works to expand literacy education to upperclassmen.
It's a group other institutions are targeting with personal finance information. St. Bonaventure University (N.Y.) embarked on an initiative for graduating seniors a few years ago that taps into the expertise and wit of a highly regarded finance faculty member. Professor Giles Boothaway has met only with seniors who have borrowed federal loans as part of the loan exit counseling process. Now officials have extended that invitation to all graduating seniors.
"Word has circulated about Professor Boothaway's presentation, and students like and respect him, so we had a strong turnout this year," reports Gall Marasco, assistant director of financial aid. Boothaway covers topics such as making and sticking to a budget, the need to establish a good credit record, and the importance of saving. He drives home the point about savings by giving students a by-the-numbers look at how they can save $1 million by retirement. He even shows students a section of his own FICO report.
Now students in SBU's Higher Education Opportunity Program (HEOP) can take a summer leadership workshop with a former banker who warns them of the risks of getting in too deep with credit cards. SBU invites HEOP freshmen from five area colleges to the workshop.
Students do the bulk of personal finance teaching at Luther College (Iowa), where the financial aid office has hired two literacy peer mentors who work about six hours a week. (State grant funds initially supported their wages.) Carolyn Schwendeman, a financial aid counselor and the peer mentors' supervisor, says that while students signed promissory notes and completed entrance interviews for student loans, surveys showed little awareness about their loan indebtedness.
Through a newsletter, a student newspaper column, a FAFSA "countdown to deadline" expo, and other activities, the peer mentors provide education and counsel about loans and other personal finance topics. One event featured mentors arriving in a public setting, one dressed in an outfit purchased at the local secondhand store, the other wearing more expensive duds from an upscale store. Students had to guess which outfit was purchased where. The mentors have also distributed fortune cookies with financial tips in place of the fortune and held contests for students to guess the total amount of loose change in a large jar--demonstrating how much one can squirrel away by saving spare change.
At Albion College (Mich.), financial literacy education is being integrated into its 2011-12 "Year of Wellness. …